Introduction: The Ministry of Corporate Affairs, New Delhi, has issued a significant notification, G.S.R. 803(E), dated October 27, 2023, amending the Limited Liability Partnership (LLP) Rules, 2009. This update introduces key changes related to the Register of Partners and the declaration of beneficial interest in contributions. In this article, we will delve into the details of these amendments and their implications for LLPs in India.
Detailed Analysis:
1. Limited Liability Partnership (Third Amendment) Rules, 2023:
- These rules are enacted under the authority of section 79 of the Limited Liability Partnership Act, 2008.
- They come into force upon publication in the Official Gazette.
2. Register of Partners (Rule 22A):
- Every LLP, from the date of its incorporation, is required to maintain a register of its partners in Form 4A.
- Existing LLPs must comply within thirty days from the commencement of the Amendment Rules.
- The register should contain various particulars, including partner details, contribution nature, and more.
- Entries must be updated within seven days of changes.
- Rectifications made pursuant to orders by competent authorities must be recorded.
3. Declaration of Beneficial Interest (Rule 22B):
- Registered partners without beneficial interest in contribution must file a declaration in Form 4B within 30 days of registration.
- Changes in beneficial interest should also be reported within 30 days.
- Beneficial partners who have an interest in contributions not registered in their name must file a declaration in Form 4C within 30 days.
- Changes in beneficial interest should also be reported within 30 days.
4. Designated Partner for Providing Information:
- Each LLP should specify a designated partner responsible for furnishing and cooperating in providing information about beneficial interest.
- This information should be filed with the Registrar in Form 4.
- Until a designated partner is specified, every designated partner is responsible for providing information.
Conclusion: The Ministry of Corporate Affairs has introduced the Limited Liability Partnership (Third Amendment) Rules, 2023, bringing crucial changes to LLP regulations. These rules address the maintenance of a Register of Partners and the declaration of beneficial interest in contributions. Complying with these rules is vital for LLPs to ensure transparency and adherence to the law. It is recommended that all LLPs carefully review and implement these changes to stay compliant and avoid any legal complications. Stay updated on future regulatory changes for a thriving and lawful business environment in India.
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 27th October, 2023
G.S.R. 803(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section 79 of the Limited Liability Partnership Act, 2008 (6 of 2009), the Central Government hereby makes the following rules further to amend the Limited Liability Partnership Rules, 2009, namely: –
1. Short title and commencement- (1) These rules may be called the Limited Liability Partnership (Third Amendment) Rules, 2023.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Limited Liability Partnership Rules, 2009 (hereinafter referred to as the said rules), after rule 22, the following rules shall be inserted, namely:-
“22A. Register of Partners.- (1) Every limited liability partnership shall, from the date of its incorporation, maintain a register of its partners in Form 4A which shall be kept at the registered office of the limited liability partnership:
Provided that in the case of limited liability partnership existing on the date of commencement of the Limited Liability Partnership (Third Amendment) Rules, 2023, shall maintain the register of partners in Form 4A within thirty days from such commencement.
(2) The register of partners shall contain the following particulars, in respect of each partner, namely:-
(a) name of the partner; address (registered office address in case the member is a body corporate); e-mail address; Permanent Account Number or Corporate Identification Number; Unique Identification Number, if any; father or mother or spouse’s name; occupation; status; Nationality; name and address of nominee;
(b) date of becoming partner;
(c) date of cessation;
(d) amount and nature of contribution (indicating tangible, intangible, movable, immovable or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed) with monetary value; and
(e) any other interest, if any,
(f) The entries in the register maintained under this rule shall be made within seven days pursuant to any change made in the contribution amount, or in name and details of the partners in the Limited Liability Partnership agreement, or in cases of cessation of partnership interest.
(g) If any rectification is made in the register maintained under this rule by the Limited Liability Partnership pursuant to any order passed by the competent authority under any law, the necessary reference of such order shall be indicated in the respective register and for reasons to be recorded in writing.
22B. Declaration in respect of beneficial interest in any contribution.-
(1) A person whose name is entered in the register of partners of a Limited Liability Partnership but does not hold any beneficial interest fully or partly in contribution (hereinafter referred to as “the registered partner”), such person shall file with the Limited Liability Partnership, a declaration to that effect in Form 4B within a period of thirty days from the date on which his name is entered in the register of partners specifying the name and other particulars of the person who actually holds any beneficial interest in such contributions:
Provided that where any change occurs in the beneficial interest in such contribution, the registered partner shall, within a period of thirty days from the date of such change, make a declaration of such change to the limited liability partnership in Form 4B.
(2) Every person who holds or acquires a beneficial interest in contribution of a Limited Liability Partnership but his name is not registered in the register of partners (hereinafter referred to as “the beneficial partner”) shall file with Limited Liability Partnership, a declaration disclosing such interest in Form 4C within a period of thirty days after acquiring such beneficial interest in the contribution of the Limited Liability Partnership specifying the nature of his interest, particulars of the partner in whose name the contribution stand registered in the books of the limited liability partnership:
Provided that where any change occurs in the beneficial interest in such contribution, the beneficial partner shall, within a period of thirty days from the date of such change, make a declaration of such change to the limited liability partnership in Form 4C.
Provided further that if the beneficial interest of registered partner is limited to the contribution stated against his name in the register of partners but he does not hold beneficial interest in contribution against any other registered partner, then, he shall not be required to file such declaration.
(3) Where any declaration under sub-rule (1) or sub-rule (2) is received by the Limited Liability Partnership, the Limited Liability Partnership shall record such declaration in the register of partners and shall file, within a period of thirty days from the date of receipt of declaration by it, a return in Form 4D to the Registrar in respect of such declaration with fees.”
(4) Every Limited Liability Partnership shall specify a designated a partner who shall be responsible for furnishing of and extending co-operation for providing, information with respect to beneficial interest in contribution in Limited Liability Partnership to the Registrar or any other officer authorised by the Central Government and shall file information of such designated partner with the Registrar in Form 4:
Provided that until a designated partner is specified under sub-rule (4), every designated partner shall be deemed to be responsible for furnishing of, and extending co-operation for providing, information with respect to beneficial interest in contribution under this sub-rule.
3. For “Form 4”, the following Forms shall be substituted, namely: –
[F. No. Policy-01/2/2021-CL-V-MCA-Part(2)]
INDER DEEP SINGH DHARIWAL, Jt. Secy.
Note.- The principal rules, were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number G.S.R. 229 (E), dated the 1st April, 2009, and last amended, vide number G.S.R. 644 (E) dated the 1st September, 2023.
